Singapore Property - DBS Research 2018-02-19: The Doubling Effect

Singapore Property - DBS Vickers 2018-02-19: The Doubling Effect Singapore Property Stocks CITY DEVELOPMENTS LIMITED C09.SI UOL GROUP LIMITED U14.SI APAC REALTY LIMITED CLN.SI ROXY-PACIFIC HOLDINGS LIMITED E8Z.SI

Singapore Property - The Doubling Effect

  • S$3.5bn in en-bloc transactions in first two months of 2018.
  • Jan’18 sales volume doubled from a year ago.
  • Developers to continue re-rating; picks - CDL, UOL, Roxy-Pacific, and APAC Realty.



A positive sign that developers are turning cautious in their land bids. 

  • Four collective sales projects were sold through private treaty in the past week, bringing year-to-date (YTD) en-bloc sales to eight sites, worth a collective c.S$3.5bn. While the total value for Jan’18 is almost half that was achieved in 2017, there appears to be a bit of “fatigue”, especially when most of the recently concluded deals are sold through a private treaty after an unsuccessful public tender. 
  • The fact that most of the sites have also been awarded at reserve price levels, rather than a premium, may indicate that developers are turning more choosy in adding to their landbank and becoming more cautious in their pricing strategy, This slowing momentum is positive, in our view, as it means lower upward pressure on final selling prices when these projects are launched. 
  • Based on estimates, the built-up in new supply (from enbloc and government land sales) of close to c.28,000 units, with another potential c.8,000 units from the 1H18 government land sales (GLS) programme, represents a still-healthy absorption rate (supply / estimated annual primary sale) of c.2.4-2.7 years.


Jan 2018 sales off to a good start; total transactions (primary and secondary market) doubled compared to a year ago. 

  • A total of 522 private residential units were sold in Jan’18, a 37% rise y-o-y. 
  • During the month, developers also moved 100 executive condominium units. The secondary market also sprang to life with 966 units sold, representing an 85% increase from a year ago. These numbers translate into S$3.1bn in transaction value in Jan’18 (S$1.1bn primary sales; S$2.0bn in secondary sales), a more-than-100% increase y-o-y. 
  • Notwithstanding the impact of the festive period in 2017 (Lunar New Year was at the end of Jan), we maintain our belief that buyer sentiment has improved significantly, buoyed by the stronger-than-expected economic growth outlook in Singapore. 
  • Sustained sales momentum will set the stage for residential prices to rise more quickly through 2018.


Developers to continue re-rating on the back of strong volumes 

  • We like developers who have the ability to catch the positive wave of buyer sentiment and deliver strong project sell-through rates (UOL and CDL) In the mid-cap space. Roxy-Pacific (Roxy), with six projects to be launched in 2018 (440 units), could see its stock price re-rate if it can achieve strong sell-through rates.
  • Property broker, APAC Realty, offers investors an opportunity to participate in the projected robust growth in transactional volume in 2018.







Derek TAN DBS Vickers | Rachel TAN DBS Vickers | http://www.dbsvickers.com/ 2018-02-19
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 14.030 Same 14.030
BUY Maintain BUY 10.150 Same 10.150
BUY Maintain BUY 1.120 Same 1.120
BUY Maintain BUY 0.690 Same 0.690



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